PSU Alert: BHEL shares rise on ₹9,500-crore order win from NTPC

Shares of Bharat Heavy Electricals Limited or BHEL gained 2% to hit a day's high of ₹271.70 apiece on NSE after the public sector undertaking (PSU) received an order from NTPC Ltd for setting up thermal power project in Uttar Pradesh. The broad consideration of the Uttar Pradesh project is valued at ₹9,500 crore.

"BHEL has received an order from NTPC Ltd for setting up the Singrauli Super Thermal Power Project, Stage-III (2x800 MW) in Sonebhadra District, Uttar Pradesh," the company said in an exchange filing.

On Monday, the BHEL stock rallied 12%, the biggest single-day gain since May 2021, on reports that the company is likely to get an order worth to construct a thermal plant.

It, however, informed the stock exchanges after trading hours on Monday that the company "as of now" has not received this order from NTPC.

But why BHEL rose on NTPC's investment approval? That is because BHEL was the only bidder for the construction of the Singrauli plant.

BHEL did mention that it had submitted a price bid on December 21 and that it is the only bidder for the NTPC tender. Although it did acknowledge that the submission of a bid does not result in the company automatically winning an order.

"The company had submitted a price bid on 21.12.2023, and is the only bidder, for the mentioned NTPC tender, which is an activity in the normal course of business," the state-owned firm said yesterday. "Submission of bid does not result into automatic bagging of an order."

BHEL's order book at the end of the first half of financial year 2024 stood at ₹1.14 lakh crore, while order inflow till the first half was ₹33,000 crore.

BHEL shares had crossed the ₹200 mark after reports had suggested that the company has been awarded the Talabira Power Project worth ₹19,422 crore.

The company officially disclosed on January 15 that it NLC India had awarded it the Talabira Project, although the size of the project was ₹15,000 crore.

Out of the 19 analysts that track BHEL, five of them have a "buy" recommendation, three say "hold," but 11 of them continue to maintain a "sell" or equivalent rating on the stock.

Domestic brokerage house ICICI Securities, which has the highest price target on the street for BHEL at ₹300, believes that the company's order wins in financial year 2024 will cross ₹65,000 crore.

However, global broking firm Jefferies, which has an underperform rating with a price target of ₹90 says that competitive pressure will impact margins and that it prefers to play this theme through other companies.